Why the 1099-K threshold keeps changing
The American Rescue Plan Act of 2021 dropped the federal 1099-K reporting threshold from $20,000 + 200 transactions down to $600 with no transaction minimum, and the IRS planned to phase it in. But the One Big Beautiful Bill Act, signed in July 2025, repealed the $600 rule and restored the prior threshold, retroactive to 2022.
As a result, the federal threshold is now:
- 2022–2024: $20,000 and more than 200 transactions (the IRS repeatedly delayed the lower $600 rule).
- 2025 & 2026 (current): $20,000 and more than 200 transactions — the old threshold, restored by the One Big Beautiful Bill Act.
Important: A 1099-K is a reporting form, not a tax bill. If you owe self-employment tax (net earnings of $400 or more from your hustle), you owe it whether or not the platform sent a 1099-K. The form just tells the IRS the platform already knows about your income.
What if I don't get a 1099-K?
This is the trap. The threshold determines whether the platform reports to the IRS — not whether you owe tax. If your net self-employment income (sales minus business expenses) is $400 or more, you still owe self-employment tax and still need to file Schedule C and Schedule SE. The IRS doesn't need a 1099-K to ask about that income.
Multiple platforms — do they combine?
No. Each payment processor evaluates its own threshold independently. If you made $1,200 on Etsy and $1,200 on PayPal in 2025, neither platform will issue a 1099-K (each is well below the $20,000 and 200-transaction federal threshold) — but you still earned $2,400 of taxable income and need to report it on your return.
State thresholds can be lower
Several states have set their own 1099-K reporting thresholds below the federal level. If you're in one of these states, you may receive a 1099-K even when the federal threshold isn't met:
- Massachusetts, Vermont, Virginia, Maryland, DC: $600 (regardless of federal rule).
- Illinois: $1,000 and 3+ transactions.
- New Jersey: $1,000.
- Other states may have additional rules — check with your state's Department of Revenue.
How to reconcile a 1099-K
The 1099-K reports gross payment volume — before fees, before refunds, before chargebacks. Your taxable income is much less than that. Keep records of:
- Platform fees deducted from each sale (Etsy fees, PayPal fees, etc.) — deductible.
- Refunds and chargebacks reversed — subtract from gross.
- Sales tax collected and remitted — pass-through, not income.
- Business expenses (supplies, shipping, software, etc.) — Schedule C deductions.
Net business income is what hits Schedule C — usually a fraction of the 1099-K gross figure. Don't panic at the big number; reconcile.
What to do next
If you've got side hustle income from any of these platforms, run a free compliance check to see what else you should be tracking — quarterly estimates, sales tax nexus, entity structure, state licenses.